LATAM continues to show operational recovery

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LATAM continues to show operational recovery despite a challenging first quarter following the appearance of the Omicron variant of Covid-19 and the significant increase in the price of fuel.

The company has continued to improve its performance at the operational level and reduce its CASK (cost per ask) ex fuel. In the period, the consolidated capacity of the group (measure in ASKs) reached the 68,2% of the levels of 2019 and an increase of 89,7% compared to the first quarter of 2021, result that was driven, principally, for the domestic operations of the subsidiaries.

LATAM operational recovery

Total revenues amounted to US$1,959 million during the period, 22,4% below the levels of 2019, but they had an increase of 114,5% compared to the first quarter of 2021. While passenger revenue fell 31,4% compared to the 2019 (+199,1% vs 1Q21), the operations of LATAM's cargo subsidiaries maintained a solid performance, with revenues of US$430.7 million, which represents an increase in 63,5% compared to the same period of 2019.

Total costs were US$2,097.2 million, which represents a decrease in 14,2% in comparison with 2019. In particular, CASK ex-fuel improved a 6,8% compared to the fourth quarter of last year, from $5.6 cents to $5.2 cents, which also represents an improvement of 29,3% compared to the first quarter of 2021. The above results are explained within the framework of the cost reduction measures implemented by the group since the beginning of the reorganization process and that will translate into savings of more than US$900 million per year..

Nevertheless, during the quarter, a significant increase was seen in the average price of fuel that reached US$3.25 per gallon (excluding hedges), an increase of 75,8% against the same period last year and even 29,9% over the fourth quarter of 2021. This rise is largely due to the conflict in Ukraine.

Roberto Alvo, CEO de LATAM Airlines Group, commented that:

“We have had a significant improvement in our results compared to the same period of 2021 in an environment that continues to be challenging”. He added that “we remain cautiously optimistic about the future, given that, although we have seen a healthy recovery in passenger demand, the continuous increase in the price of fuel is a variable that we observe carefully”.

The operating result reached losses of US$138.2 million, while the bottom line result was losses of US$380.1 million, which compares with a net loss of US$60.1 million in the same period of 2019 and a loss of US$430.9 million during the first quarter of the previous year.

Regarding the Chapter 11, the 6 May 2022, LATAM reported the results of the vote on its Reorganization Plan, which reached sufficient support of approximately 82% in dollars and approximately 65% of the number of creditor voters of the classes affected by the Plan. These results do not include RCF claim holders, who still have time until 10 May of 2022 for vote. This after the approval by the US Court of the Disclosure Statement (“Disclosure Statement”) the 21 march 2021, which allowed the Debtors to start the process of soliciting votes. The Plan Confirmation Hearing is scheduled to take place on 17 and 18 May 2022, According to what was established by the Court of USA.

Advances in sustainability

Regarding the schedule of sustainability of the group, during the quarter LATAM launched “Friday Fly Neutral”, initiative that offsets emissions from emblematic routes on Fridays, supporting the protection of strategic ecosystems in the region. At the same time, the group incorporated a new sustainable Eco kit in the business cabin and the plastic bags of hearing aids were replaced, blankets and pillows for reusable materials.

To support the response to humanitarian crises worldwide, the LATAM Solidarity Plane program made available to the UN Refugee Agency (UNHCR), free passenger and freight transport to help people who have had to leave their homes in search of safety and security. What's more, added two new alliances: the Fundación Cardioinfantil in Colombia and the Committee of Foundations of the Global Initiative to Fight Childhood Cancer in Peru.

Flight Recovery

LATAM projects a passenger operation of up to 73% for May (measured in available seat-kilometres – ASK) compared to the same month 2019 (pre-pandemic scenario). This would be the fourth month of a positive operational trend for the group, hand in hand with the reactivation of routes and the launch of new destinations to the global connectivity network.

LATAM expects to operate approximately 1.115 daily national and international flights during May, connecting 133 destinations in 20 countries. Among the novelties of this month stands out the start of operations of the Brasilia-Sinop route, in the Brazilian domestic market. The cargo business, while, have programmed 1.210 flights on cargo planes. All these projections are subject to the evolution of the pandemic in the countries where the group operates.

• Brazil
  • 78% projected operation (versus mayo 2019). April projection reference 2021: 74%
    • 100% domestic and 56% international
  • Total May destinations: 50 domestic (equivalent to 532 average daily flights) and 18 international.
  • News:
    • Domestic: New Brasilia-Sinop route (7 f/s)
• Chile
  • 62% projected operation (versus mayo 2019). April projection reference 2021: 59%
  • 78% domestic and 55% international
  • Total May destinations: 15 domestic (equivalent to 117 average daily flights) and 22 international
• Colombia
  • 114% projected operation (versus mayo 2019). April projection reference 2021: 107%
  • 176% domestic and 60% international
  • Total May destinations: 17 domestic (equivalent to 192 average daily flights) and 5 international.
• Ecuador
  • 41% projected operation (versus mayo 2019). April projection reference 2021: 41%
  • 124% domestic and 19% international
  • Total May destinations: 8 domestic (equivalent to 40 average daily flights) and 3 international
• Peru
  • 68% projected operation (versus mayo 2019). April projection reference 2021: 67%
  • 88% domestic and 61% international
  • Total May destinations: 19 domestic (equivalent to 155 average daily flights) and 22 international
• Load
  • 96% projected operation (versus mayo 2019). April projection reference 2021: 94%
  • 81% domestic belly and 69% belly international*
  • 144% dedicated freighter

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